In situ environmental transmission electron microscopy (ETEM) studies on nanostructures, in parallel with conversion and selectivity measurements, have been carried out on Ni/SiO2 catalysts for partial oxidation of methane, in order to elucidate structure–property relationships. In situ ETEM experiments under different gas conditions are carried out to simulate the various gas atmospheres that exist in the reactor. During ramp-up in CH4 and O2, Ni metal particles transform to void-like NiO particles at temperatures above 300 °C due to preferential migration of Ni cations along grain boundaries and extended defects. As the temperature increases, the gas environment becomes more reducing, transforming NiO back to Ni and favoring syngas formation. The NiO reduction mechanism also involves diffusion of Ni cations along grain boundaries and extended defects. This transformation pathway suppresses the formation Ni metal crystallites on the catalyst surface during the early stage in NiO reduction. Syngas formation only takes place during the later stages of NiO reduction, when Ni metal nanoparticles have broken through the NiO shell.